Since its establishment in 2018, Bybit has expanded rapidly to become one of the top three most-visited global cryptocurrency exchanges, capable of handling 100,000 transactions per second. With the pandemic expediting the development of a digitally-forward financial ecosystem that seeks to facilitate democratisation across the investment space, innovators and regulators are collaborating to shape the future of finance.
In this exclusive interview, FinanceAsia speaks to Bybit co-founder and CEO, Ben Zhou, who offers personal insights on the development of the digital asset space.
FA: What initially drew you to participate in the digital asset space?
BZ: My journey with cryptocurrency began in 2017 when I was drawn to its potential to revolutionise traditional finance. My ambition was to create a crypto trading platform to address traditional market inefficiencies, and my vision for Bybit was to serve as a crypto arc to enable digital natives achieve their financial goals in relative safety.
Today, a large unbanked population continues to be denied financial accessibility from traditional institutions, and crypto is a pivotal force that is creating an alternative financial infrastructure that is global, open sourced, and accessible. Crypto is enabling financial inclusion.
Bybit is committed to educating users and equipping them with critical insights and analysis within the rapidly changing financial landscape. We want to position wealth in the hands of the common people.
FA: Since its launch, Bybit has expanded its product suite, growing from a derivatives platform to one that offers cryptocurrency trading and a popular NFT marketplace. What are your priorities for coming months?
BZ: Since Bybit’s foundation, we’ve constantly innovated to offer online spot and derivatives trading services, earnings and savings products, as well as a popular non-fungible token (NFT) exchange, all of which are supported by an ultra-fast matching engine and multilingual customer support, 24/7.
I would attribute the firm’s success to its globally diverse team. We are laser-focussed on providing the best trading experience for users and we have a company culture that empowers our employees.
Moving ahead, we want to revolutionise the industry by fusing the best of crypto innovation with traditional finance expertise. At the infrastructure level, we are always fine-tuning our engine to optimise our platform’s trading experience. We are also expanding our security assurance capabilities as we introduce more products and service integrations.
In April this year, we launched credit and debit card payments, which allow users to buy crypto using fiat currencies. We have an exciting line-up of products and feature enhancements across coming months, including the availability of Ether and Solana options contracts from 3Q22, and a portfolio margin feature that will enable traders to leverage their portfolios with greater capital efficiency.
FA: In March, you announced the relocation of your headquarters from Singapore to Dubai. Can you provide us with an update following the move?
BZ: Dubai is a key hub for the cryptocurrency industry. The government has built a business-friendly ecosystem and a robust regulatory environment that continues to attract, retain and enable high-growth companies such as Bybit.
Through our relocation to Dubai, we are able to contribute to the vibrant Emirati economy by helping advance its stakeholders’ understanding of this complex industry as the digital assets space matures.
We are fully committed to supporting the regulatory efforts of the UAE government, with whom we are keen to share in-depth industry knowledge and experience, while educating retail investors and the wider public on the use of virtual assets in a safe and responsible manner.
Bybit has a team of more than 2,000 employees across ten bases and we support over six million users in 16 languages. Our Dubai headquarters is home to employees from varied corporate functions and we are actively recruiting local talent.
FA: What is your take on financial market readiness when it comes to the adoption of digital assets?
BZ: While the crypto space is relatively new, digital assets share some fundamental similarities with traditional finance. For example, the mechanics that drive the valuation of crypto and fiat currencies are similar, such as supply and demand. Increasingly, we are also seeing the integration of different traditional forms of financial instruments – such as futures and options – into crypto ecosystems.
I believe that the transferability of trading knowledge and experience will take cryptocurrency towards mainstream adoption.
Along with the booming NFT marketplace – an adjacent digital asset class that also leverages blockchain technology – cryptocurrencies have come a long way in cementing their relevance within the financial market.
This is corroborated by the findings of Bybit’s recent research in collaboration with Nansen. Our Crypto State-of-the-Industry report found that despite the plummeting valuation environment of the current bear market, most chains are holding strong and are processing similar transaction volumes as this time last year. The NFT marketplace echoes this trend. It is experiencing a steady uptick in user adoption with more first-time and returning buyers than any other sector within the overall crypto industry.
As industry players and regulators collaborate to improve regulatory clarity, doubts from crypto-curious investors will be assuaged and the mainstream adoption of cryptocurrency will accelerate.
FA: This year, Singapore banned crypto advertising to the general public and introduced the Financial Services and Markets (FSM) Bill, requiring licences for local operation. The UAE meanwhile established the Dubai Virtual Assets Regulatory Authority (VARA) which appears to be crypto-accommodative. How is contrasting regulation impacting the global development of digital assets?
BZ: The regulation of cryptocurrency is an acknowledgment of its increased prominence as an asset class within the financial markets. As always, Bybit welcomes regulation as we believe it is catalytic to the healthy development and wide adoption of virtual assets.
Those regulators that are open to industry discussion and encourage innovation will benefit from first-mover advantage in the future of digital money and value exchange in their respective jurisdictions.
At the top of regulators’ collective minds is transparency and accountability, particularly at the stages of company listings and across advertising. These elements are likely to guide the broader industry and are discussions we can get behind as a centralised exchange.
While we do not offer services or products to Singapore-based users, the city-state’s scrutiny of the asset class will ensure that the market retains its reputable and reliable financial ecosystem.
For regulation to be effective, the maturity of a country’s legal and financial regimes, as well as its supporting infrastructure must be considered. Additionally, macro socio-economic factors act as confounding variables that add to the complexity of policy development. It would be remiss to compare globally contrasting regulatory ecosystems, but one thing remains crucial: regulatory clarity is important for any business operating in this emerging sector, and we should not perceive such developments as setbacks.
What we can take away from Singapore and Dubai’s discrete approaches, is a commitment to advance the crypto economy in a principled and sustainable manner. I think this will set a progressive tone for markets both regionally and globally.
FA: You recently relaunched LUNA trading. How do you address concerns around the pricing volatility of digital assets?
BZ: The LUNA-UST crash was one of the worst crashes in crypto’s history. However, it is worth noting that those before have preceded innovation and upward market trends. This incident was not the first market correction, and it won’t be the last.
Following the relaunch of Terra 2.0, Bybit has supported the airdrop of new LUNA tokens to all eligible users in accordance with Terra’s token distribution plan, and since, the LUNA/USDT spot trading pair has gone live on our platform. While the relaunch is not an endorsement of the product’s viability as its performance remains to be seen, it serves as a direct response to the demands of our community.
Nonetheless, in the unfortunate event of another large market crash, we are confident that our platform’s capabilities enable traders to manage their own positions effectively. We’ve put in place safeguards to alert users to acutely leveraged liquidity positions, and we will compensate them at a fair market price if their positions are unfairly closed. For additional support, we offer an insurance fund that helps protect traders from negative equity and losses beyond a particular position margin.
FA: In June, activity related to OpenSea and the Bored Ape NFT has underscored security issues and loose regulation in the digital asset space. How do you go about mitigating such risks?
BZ: Security is something we invest in above the industry average. Around 25% of our funds is directly dedicated to upholding and strengthening security standards, such as safeguarding user funds via HD Cold Wallet storage, data encryption and closely monitoring any suspicious activity.
We enable customisable security settings for users to manage their sign-in methods, connected devices, wallets and IP addresses, and we offer unique personal anti-phishing codes to minimise the possibility of account access by bad actors.
Platform safety is our priority as we strive to be the most reliable exchange for the emerging digital asset class. We employ attested Know Your Customer (KYC) mechanisms that comply with global financial regulations on Anti-Money Laundering (AML).
FA: What do you make of progress across central bank digital currencies (CBDC), including pilot schemes such as China’s e-CNY?
BZ:Some 80% of central banks are already exploring the notion of stablecoins, as they warm up to the idea of flexible payment systems over printed cash. Ultimately, support for the introduction of CBDCs stems from calls for improved efficiency and financial inclusion.
Design and implementation are key to redefine what money and currency mean for a particular country, so it would be cavalier to suggest that the benefits or challenges of one project could impact the development of the DeFi space at large.
However, CBDCs do have a significant role in the reinvention of finance, particularly in the sale and purchase of digital assets and securities. As more individuals make digital transactions, it is more likely they will begin trading crypto assets on exchanges like Bybit. The development of digital currencies could be one of the most significant changes to the way the financial system is built and operated.